YPF Sociedad Anónima (YPF)

By both methods, the value today (DCF $40 · Multiples $27) is below the market price ($52).

Today — expensive, no margin of safety: at $52 trades ~92.2% above its value discounted to today (~$27); the expected return does not even reach the risk-free rate (4.5%).

At 5 years — Sobrevalorado: the expected total return is negative — the price already discounts a demanding scenario that, if not met, results in a loss.

The bridge: the return at 5 years falls below the risk-free rate (4.5%) — which is why there is not even a discount to today's value. To require a 15% annual return, it would need to be bought at ~$17.

Educational / informational. Does not constitute investment advice.

The inverse approach: instead of projecting growth to obtain the value, the market price ($52) is taken as given and it solves for what annual owner-earnings growth would need to hold for 5 years for the present value —at the method's rate (4.5%, no-growth terminal)— to equal that price. It is the disconfirmation test: the expectations the price already pays for, contrasted against the method's projection.

The price discounts growth (8.0%/year) above our base case (4.0%/year) → it is priced for a demanding scenario and leaves little cushion against a slowdown.

That growth implies ~$1.4 bn of owner earnings in year 5 (vs ~$1.2 bn of our base case). It recalculates if the DCF assumptions are edited.

Year-by-year projection of the selected scenario. From each year, two versions of the flow are derived: growth FCF (operating flow − total capex, the cash surplus) and maintenance FCF (the owner earnings: what the business yields if it only sustains its capacity). The flow is returned almost in full (dividend + buyback) or redeployed into the operation, so that EV stays roughly flat and multiples compress because the metric grows, not because of cash accumulation. The valuation is done on Utilidad neta atribuible de mitad de ciclo (P/E). In edit mode, revenue, margins, capex, and exit multiples can be adjusted.

Year 0 = the full fiscal year 2025, ended 31 December 2025. YPF is a foreign issuer that files Form 20-F and does not publish quarterly statements tagged in the Securities Commission database, so no rolling twelve-month window is manufactured: the method's annual reporter convention sets year 0 at the last fiscal year filed. It reports in dollars and trades in dollars (the peso series died in 2021), and the depositary certificate represents one Class D share, so there is no currency conversion or exchange ratio to apply. The normalization is the central judgment and it is large. Reported operating income for 2025 was US$1,740 million and earnings attributable to the parent were negative by US$826 million: between those two lines there is more than US$2,500 million worth opening up. The income statement explains them: the result of interests in associates and joint ventures of US$122 million, a net financial result of −US$952 million (financial costs of US$1,087 million) and, above all, an income tax charge of US$1,709 million on pre-tax income of barely US$910 million. That effective rate of 187.8% is an artifact of the fiscal year, not the business's tax burden; the method prohibits using it and prohibits replacing it with an assumed rate, so the cumulative effective rate of the four fiscal years the financial database publishes is used (aggregate tax of US$777 million on aggregate pre-tax income of US$3,328 million between 2022 and 2025), that is 23.4%. From operating income, US$330 million of other net operating results are removed, which management's discussion attributes mainly to the result on the sale of companies: it is money that does not come back and cannot stay in the base. Recurring operating income for 2025 then comes to US$1,410 million, a margin of 7.6%. The same caveat applies to the New Energies segment, which shows US$432 million of operating income on US$843 million of its own revenue, a 51% margin that is not a sustainable economics of gas distribution and generation: much of that result comes from holdings accounted for by the equity method and from the result on the sale of interests, not from the segment's billings, and that is why the level is not projected forward. Adding the normalized result of interests (US$120 million) and a normalized net financial result of −US$900 million, mid-cycle pre-tax income comes to US$630 million; at the cumulative effective rate of 23.4% and after deducting the non-controlling interest, normalized attributable earnings are approximately US$456 million. That is the year-0 level of the metric, and not the −US$826 million reported or the US$2,348 million of 2024, which carried a tax credit of US$1,373 million inside. The price of crude is taken at the midpoint of the normalized range and not at an extreme: Brent averaged 68.2 dollars per barrel in 2025, 14.5% below 2024, and that is the level at which the path is sustained. The revenue projection starts at +7.0% and decelerates evenly to +4.0% by the fifth year. The starting point is within the band of the reported trajectory (−7.7%, +11.4%, −4.4%) and above its average, and the difference is declared: the 4.4% decline of 2025 was price and portfolio, not activity. The report itself records that crude sold 11.9% cheaper and gas 2.9%, that unconventional crude production grew 34.6% and gas 13.7%, that refinery processing rose 6.5% to 320 thousand barrels a day (the highest level since 2010) and that total production fell only 1.7% on the divestiture of mature conventional fields, a portfolio process already in its final stretch. With the price held at the midpoint, the growth that remains is volume. The company also raised its 2026 investment program to a range of US$5,500 to US$5,800 million, against US$4,500 million executed in 2025. Declared gap on guidance: the earnings release subsequent to the annual report could not be identified. The issuer seals the period of its periodic communications (628 of 900 declare as their period their own filing date), so the pipeline cannot distinguish which one corresponds to the latest close and the method prohibits guessing. The path is therefore not anchored to published revenue guidance, but to the normalized trajectory and to the only quantitative guidance that does appear in the annual report, which is the investment program. The difference is not attributed to short-term noise: the earnings guidance figure is not available and is declared as such. Two more mechanical facts. The financial database's concept for the acquisition of fixed assets has its window stopped at 31 December 2018, seven years ago, so it is not used: capex comes from the cash flow statement of the report itself, where the acquisition of fixed and intangible assets was US$5,077 million in 2025 (US$5,392 million in 2024 and US$5,673 million in 2023). And the database does not carry equity either, so invested capital is built from the report's balance sheet: total equity of US$11,044 million (assets of US$29,439 million less liabilities of US$18,395 million), plus borrowings of US$10,581 million (US$8,226 million non-current and US$2,355 million current), less cash of US$933 million, that is US$20,692 million. The metric is normalized attributable net income, valued on an earnings multiple, and the flow is already after interest, so the model carries no cash or debt in the bridge. Cash does not accumulate: the company has paid no dividend since 2022 and does not repurchase its own shares (the buybacks it reports are of negotiable obligations, US$175 million in 2025), and operating flow of US$4,959 million comes in below capex, so the surplus does not exist and net indebtedness rises. Maintenance capex is set at 60% of the total, that is US$3,046 million, very close to the depreciation and amortization charge of US$2,918 million (fixed asset depreciation of US$2,857 million plus intangible amortization of US$61 million); in an exploration and production company that closeness is economically correct, because the depletion of reserves measures precisely what must be reinvested to replace them, and the capex that exceeds that level is multi-year expansion of Vaca Muerta and of the evacuation and liquefaction infrastructure, which takes years to appear in revenue.

Today's elevated multiple is the price of growth: if the business grows, the entry point cheapens on its own going forward (the metric grows while EV stays roughly flat). The exit multiple at 3 years is higher than the terminal at 5 years —at 3 years there is more growth still ahead—, so the value curve shows whether value creation is concentrated in the early or the later years. The required return is applied to the base scenario.

They are valued separately, with their own rationale, and are not incorporated into the base or the verdict (they are excess return). When assigning them value — in Editmode —, the total with optionalities updates live, without moving the base.

The verdict, the base CAGR, and the margin of safety are always calculated on the base; optionalities do not alter them (with optionalities at $0 they do not move).

Each card fixes a required annual return and answers: if the business is worth $34 in 5 years, what is the maximum that can be paid today to obtain that return? Since it now trades at $52, the margin of safety is how much cheaper the market is than that maximum. The three thresholds: 4% covers inflation (the floor), 10% is the long-term average return, and 15% is the level of a great investment.

With a target price of $34 in 5 years and a required return of 4.5% annually, the maximum to pay today is $27. Against the current market price ($52), the margin of safety is -92.2% (trades above the maximum → a premium is paid) and the total return at that price would be -8.3% annually.

• Entry multiple. 45× over mid-cycle earnings, well above the exit-multiple band for an integrated oil company.
• Estimated return. -8% per year over five years, with no dividend: the company made no distributions in 2023, 2024, or 2025.
• Asymmetry. The range is wide: -8% in the adverse scenario against -8% in the favorable one, and the favorable scenario requires the export infrastructure to reach full operation within the horizon.

Each margin over sales, year by year: historical (solid line) → projection (dotted).

• ✕ ROIC exceeds the cost of capital (~10%)
• ✓ CFROIC backs up the ROIC (88%, cash vs. accruals)
• ✓ Healthy balance sheet (low corporate debt)
• ✓ Durable competitive moat (multiple advantages)

• Return on capital. 6.4% on invested capital of US$20,692 million, below the 10% bar; on the normalized base it drops to 5.2%.
• Earnings quality. Reported earnings are unreadable without normalizing: in 2024 they carried a tax credit of US$1,373 million and in 2025 a charge of US$1,709 million on pre-tax income of US$910 million.
• Cash generation. Operating cash flow is high and stable (between US$4,959 and US$5,913 million over the last three fiscal years) but capex consumes it entirely: 2025 free cash flow was negative by US$118 million.

Annual levels from the official filing (10-K); the % over each bar is the year-over-year (YoY) growth vs the prior year.

The business's engine is volume times price across two distinct planes: production times crude and gas realization price in the production segment, and processed volume times refining and marketing margin in the rest of the chain. In 2025 the two planes moved in opposite directions: unconventional volume and processing grew, while price fell across every line (crude −11.9%, gas −2.9%, diesel −8.5%, gasoline −5.5%). The base case holds price at the midpoint, so the projected growth is volume growth.

The % are the annual (year-over-year) growth: each year —historical and projected— vs the prior one; the TTM (trailing 12m) vs the TTM of a year ago, to avoid overlapping windows. The historicals are exact figures from the official filings; the projected years come from the year-by-year model (the intermediate years without their own series are interpolated between the anchors). The projected columns (+1y…+5y) are 12-month windows counted from the TTM close (31-dic-2025): the projection starts from the most recently reported data, not the fiscal year. The projected base is realistic and unbiased — the risk discount is applied at the end, via the required return. The rationale for each metric is in the (i).

• Unconventional volume. Shale crude +34.6% and unconventional gas +13.7% in 2025, with unconventional production already at 65% of the total.
• Refining. Processing of 320 thousand barrels per day, 6.5% more than in 2024 and the highest level since 2010, with aviation fuel production growing 17.1%.
• Price. Brent averaged US$68.2 per barrel in 2025, 14.5% lower than in 2024, and domestic diesel and gasoline prices fell 8.5% and 5.5%. Price contributes no growth in the base case.

• Relevant in 10 years. Liquid fuel and natural gas will remain the core of Argentina's energy system for decades, and the company is the dominant operator in both.
• Pricing power. None of its own: it is a taker of the international crude price and, in the domestic market, fuel prices have historically been subject to intervention by the controlling shareholder.
• Cyclicality. Intrinsically cyclical. Operating income went from US$2,482 million in 2022 to −US$1,248 million in 2023 and to US$1,740 million in 2025, tracking the crude price and impairments.

Not all debt is equal: only the structural needs refinancing; the rest is operational (self-liquidating).

Structural debt is what is exposed to the contraction phase of the cycle; operational debt (leases, matched funding) self-liquidates with the business.

• !Leverage (net debt / EBITDA)Net debt / EBITDA 2.2x
• ✕Interest coverage (EBIT / interest)1.3x
• –Liquidity (current ratio)no data
• ✓Cash quality (CFROIC vs ROIC)CFROIC backs 88% of ROIC
• ✕Value creation (ROIC − 10% bar)-4pp
• ✓Malinvestment test (capex vs incremental ROIC)Capex/D&A 1.7x
• –Float / working capitalNeutral WC
• ✓Dilution (SBC % of revenue + shares)SBC 0.0% of revenue

A traffic-light interpreted by the method (not generic): float (negative WC) adds up, capex is judged by incremental ROIC (malinvestment test), and a lender is not subjected to corporate solvency. The (i) shows the derivation of each number.

• Leverage. Net debt of US$9,648 million against equity of US$11,044 million, with debt rising because the investment program exceeds operating cash flow.
• Financial cost. Net financial result of −US$952 million in 2025 (financial costs of US$1,087 million), equivalent to more than half of operating income.
• Liquidity. Cash of US$933 million against current loan maturities of US$2,355 million; access to the debt market depends on the country's conditions.

Who owns the shares — the alignment and whether there is a controlling shareholder.

• Controlling shareholder. The Argentine State holds 51% of the capital, elects the majority of the board, and can decide on pricing policy; the report warns that its decisions may not align with the minority's interest.
• Capital allocation. It reinvests the entirety of operating cash flow and then some: capex of US$5,077 million against operating cash flow of US$4,959 million, with no dividend since 2022 and no buyback of common stock.
• Portfolio management. Divestment of mature conventional fields to concentrate capital on unconventional development, with shale production already at 65% of the total. It is a reallocation consistent with the stated strategy.

• It is not cheap: it trades at 45× over mid-cycle earnings (US$456 million, removing the gain on sale of subsidiaries and using the cumulative effective tax rate of 23.4%), well above the 10×-15× exit-multiple band for an oil company.
• At $52: what is being paid for is Vaca Muerta's conversion into an export business, not current earnings.
• That expectation depends on the export pipeline and the liquefaction project, infrastructure the company does not fully control and that requires partners and financing; meanwhile return on invested capital is 6.4% against the 10% bar and 2025 free cash flow was negative.

No positive source of over-discounting was identified: there are no missing buyers or motivated sellers, only a growth expectation already priced in. The correct reading of this section is why the market is paying this price, and the answer is the full execution of the export plan, discounted as if it had already happened.

The annual return (CAGR at 5 years) in each scenario, with the total period return below — the margin of safety made visual: upside range wide, downside range narrow.

Even in the bear scenario, the return holds at -24%/year (-75% total): the margin of safety protects the downside. The bull (+4%/year, +22% total) exceeds it comfortably — a favorable asymmetry, with a narrow downside range and a wide upside range.

• State control and price intervention. The State holds 51% and can decide on product pricing policy: regulatory risk is not hypothetical at this company.
• Exchange controls. Central bank authorization is required to remit dividends to non-resident shareholders, and the report warns that future restrictions could prevent it.
• Litigation with a share-turnover order. A court order, currently stayed, requires the transfer of the shares the State holds in the company, which could trigger change-of-control clauses in the financial debt.

Each thinker's analytical framework applied to our data.

• Buffett / Graham Quality + margin of safety

  Fails the quality gate: ROIC 6% does not clear the 10% bar.

• Peter Lynch Growth at a reasonable price (GARP)

  A cyclical growing 4% at a PEG of 11.2 → expensive for its growth.

• Joel Greenblatt Cheap and high-return (Magic Formula)

  Earnings yield 5% (EBIT/EV) + ROIC 6% → falls outside the Magic Formula.

• Howard Marks Perception vs reality + cycle

  The price discounts 8% vs our 4%: priced for perfection, no favorable mispricing.

• Seth Klarman Capital protection (bear scenario)

  Bear-scenario floor -24%/yr over 5y (material loss) → risk of permanent capital loss.

• Pat Dorsey Moat strength (Five Rules)

  A narrow moat, stable; sources: efficient scale, cost advantage, intangibles → partially passes the Five Rules.

• Aswath Damodaran Expectations implied by the price

  The price implies 8% vs our 4%: coherent, but at the optimistic end of the range.